Original Valuation (12/02/2023)
Vista Group (VGL) are aiming for $175-$205 NZD in ARR by FY2025 as they transition their existing customers onto their latest cloud offering.
Converting this back to AUD, revenue estimate would be around $200m including some non recurring revenue.
They are also aiming for EBITDA margins of 15% which would give them EBITDA of around $30m in FY25.
The company see this as their inflection point in which they will see operating leverage and be able to generate free cash flow.
Giving them a 15x EBITDA valuation at FY25 and discounting back 10% pa would give a valuation of around $1.46.
I’m not a huge fan of them using EBITDA as their profitability metric as the next few years they have stated that there will be increased capitalised development costs which will need to be depreciated and amortised in time but I guess this is the best information we have currently.
They have also stated that they will have enough cash to reach this inflection point.
Currently holding a small holding and will be watching their full year results with interest on March 1.
Disc: Held IRL and on Strawman